Ninten-d'oh —

Nintendo execs take salary cuts amid slow Wii U sales

Nintendo President Satoru Iwata has already said he won't step down amid the company's recent poor market performance, but that doesn't mean he and other Nintendo executives aren't feeling some of the company's pain. Nintendo has announced (as reported by the AP) that Iwata will take a 50-percent pay cut for five months starting in February. Two high-level directors, including storied Mario creator Shigeru Miyamoto, will take 30-percent pay cuts, while seven members of Nintendo's board will see their pay reduced 20 percent.

The move comes as Nintendo confirms what the company warned of with its severely reduced sales projections earlier this month. In 2013, the Wii U sold just 2.8 million units worldwide. That's down from 3.06 million units it sold to early adopters in fewer than three months when it launched in 2012, showing a worrying lack of momentum for a system that is facing new competition from the likes of the PS4 and Xbox One.

On the portable side, the 3DS is doing considerably better than its home console counterpart. Nintendo pushed out 12.7 million units of the system during the last nine months of 2013, including over 5 million in Japan alone. That number sounds less impressive, though, when you compare it to the 24.5 million the Nintendo DS sold during a similar nine-month stretch in its third full year on the market.

This speaks more of the record-setting market performance of the original DS than anything particularly lacking in the 3DS' sales. Still, when looked at as a generation-to-generation trend, the downward trajectory isn't heartening.

To put Nintendo's current console/portable dichotomy in some stark relief, consider that a game that sold to every Wii U owner in existence through 2013 would still have barely half the sales of 3DS mega-hit Pokemon X/Y, which has attracted 11.6 million sales so far. Even a mid-range 3DS game like Animal Crossing: New Leaf, with 3.52 million sales worldwide, was able to outsell the Wii U in 2013.

Despite all this, Nintendo still managed to show a modest ¥10.2 billion ($99 million) profit for the last nine months of 2013. That's down from ¥14.55 billion ($141.7 million) in the same period in 2012, though, and Nintendo expects it won't be enough to carry it to profitability for the entire fiscal year, which ends in March. That would be the third such fiscal year loss in a row for a company that turned consistent profits for decades before this recent lull. It will take a while for such losses to eat through the company's massive reserves of cash on hand, but given the Wii U's poor start, Nintendo's current trajectory seems unlikely to turn around any time soon.

Kyle Orland
Kyle is the Senior Gaming Editor at Ars Technica, specializing in video game hardware and software. He has journalism and computer science degrees from University of Maryland. He is based in the Washington, DC area. Emailkyle.orland@arstechnica.com//Twitter@KyleOrl

The concept itself isn't that bad. The execution (seriously? Yet another vastly underpowered console?) and the software support are what's lacking. This combination has been a perpetual problem for Nintendo over the last several generations and I don't know what the company has even tried to do to fix it.

The concept itself isn't that bad. The execution (seriously? Yet another vastly underpowered console?) and the software support are what's lacking. This combination has been a perpetual problem for Nintendo over the last several generations and I don't know what the company has even tried to do to fix it.

It worked for the Wii because there was a rather large, untapped market of potential casual gamers who couldn't care less about graphics and were drawn in by the attractive price tag. That market has moved on to smartphones and tablets, so the Wii U's attempt to piggyback off its predecessor's success didn't pan out.

And it's a bit late for them to try to win back the hearts of the hardcore crowd.

No, I think the concept is bad. The Gamepad is unwieldy, burns through its battery quickly and makes the system expensive. Trying to track two screens at different distances is confusing, and even Nintendo's best can't figure out how to make interesting use of the second display. Consider that Mario Kart reduces it to a horn button, and the new Donkey Kong game just leaves the display off.

The concept itself isn't that bad. The execution (seriously? Yet another vastly underpowered console?) and the software support are what's lacking. This combination has been a perpetual problem for Nintendo over the last several generations and I don't know what the company has even tried to do to fix it.

Nintendo has had a downward trajectory in their home console sales since the NES, every console since then, with the exception of the Wii, has sold less than the one previous, even though the number of gamers is increasing.

For real numbers (sales of each console in the millions, worldwide) NES (62) SNES (49) N64 (33) GC (22) Its pretty obvious that the WiiU is just another Nintendo console in a long line of poor console sales. They managed to hit a large (but fickle!) market with the Wii that they were hoping they could ride with the WiiU, but it seems like the WiiU will be par for the course with Nintendo consoles.

That sounds so weird to see a company executive take a salary cut when their company is doing poorly.

The north american method would be to claim nothing is wrong and give themselves multi-million dollar bonuses.

That's not the only difference between American and Japanese CEOs. A couple of years ago when regulators implemented a new rule for pay disclosure by execs making more than US $11 million, only 300 people in the country needed to comply.

I don't know why, but it really kinda hurts to see Nintendo struggle. I don't think they are necessarily doomed or anything, but it makes me wish I could work for them and help them figure their $#!+ out.

Good on the execs for taking the cut, though. It really is such a sharp contrast to American corporate culture lol...

I think the Gamecube and Wii taught too many of us that Nintendo hardware is not really a good investment when only the first-party games are worth playing.

I would buy a Pikmin or Zelda title in a heartbeat for my Xbox or even my phone, but I'm not inclined to buy an entire new console anymore just to play those games and maybe one or two others here and there over the next few years.

Nintendo would make a hell of a lot more money off of me if they sold even one product that fit that mindset.

That sounds so weird to see a company executive take a salary cut when their company is doing poorly.

The north american method would be to claim nothing is wrong and give themselves multi-million dollar bonuses.

That's not the only difference between American and Japanese CEOs. A couple of years ago when regulators implemented a new rule for pay disclosure by execs making more than US $11 million, only 300 people in the country needed to comply.

That's because most CEOs don't make an extremely high salary. They get the big bucks from bonuses and stock options. Preferred stock FTW!

No, I think the concept is bad. The Gamepad is unwieldy, burns through its battery quickly and makes the system expensive. Trying to track two screens at different distances is confusing, and even Nintendo's best can't figure out how to make interesting use of the second display. Consider that Mario Kart reduces it to a horn button, and the new Donkey Kong game just leaves the display off.

I've played my Wii U for months now and have never run into a battery issue on the Gamepad. Tracking two screens has never been an issue, since the Gamepad screen tends to display secondary information (inventory, maps, status) or, more frequently by me, used as the primary display so the TV can do something else. That last feature alone makes the Gamepad worth it in a home with kids and a single television.

The problem is that Nintendo doesn't target the Hardcore Gamer market (and hasn't since SNES), but the family/casual market they are targeting is not purchasing either. Not including the Gamepad leaves them with nothing but a low powered console compared to the other two.

The concept itself isn't that bad. The execution (seriously? Yet another vastly underpowered console?) and the software support are what's lacking. This combination has been a perpetual problem for Nintendo over the last several generations and I don't know what the company has even tried to do to fix it.

That doesn't really add up, several generations? Wii was the first Nintendo system that was notably underpowered compared to it's rivals, and it crushed them. The Wii U is certainly not as potent as the PS4, but it's not impotent, it's decent HD.

The concept itself isn't that bad. The execution (seriously? Yet another vastly underpowered console?) and the software support are what's lacking. This combination has been a perpetual problem for Nintendo over the last several generations and I don't know what the company has even tried to do to fix it.

That doesn't really add up, several generations? Wii was the first Nintendo system that was notably underpowered compared to it's rivals, and it crushed them. The Wii U is certainly not as potent as the PS4, but it's not impotent, it's decent HD.

Yeah, of course you're right. The Gamecube didn't use weird mini-discs that caused space issues on games, the N64 didn't use cartridges in the era of CD-ROMS and definitely didn't have a texture limit of 4KB. Only the Wii was underpowered. Yup.

EDIT: WAIT! No! I just came back to reality and realized that the things I said above DID happen, and Nintendo really has been releasing underpowered consoles for over a decade! Golly, what a silly mistake to make!

That sounds so weird to see a company executive take a salary cut when their company is doing poorly.

The north american method would be to claim nothing is wrong and give themselves multi-million dollar bonuses.

Actually, you said a key word, American. I wouldn't be surprised if the cuts were voluntary as the bulk of Japanese business culture that I've been exposed to carries a ton of personal pride. Failure is not an option and is looked down upon, no matter how small.

Granted, you said North American. Don't know how my Canadian neighbors operate, outside of Blackberry - "All is well... Not going under... Nothing to see here... Hey - did you see that Moose run by? Beauty!"

Despite all this, Nintendo still managed to show a modest ¥10.2 billion ($99 million) profit for the last nine months of 2013. That's down from ¥14.55 billion ($141.7 million) in the same period in 2012, though, and Nintendo expects it won't be enough to carry it to profitability for the entire fiscal year, which ends in March. That would be the third such fiscal year loss in a row for a company that turned consistent profits for decades before this recent lull. It will take a while for such losses to eat through the company's massive reserves of cash on hand, but given the Wii U's poor start, the Nintendo's current trajectory seems unlikely to turn around any time soon.

If they posted profits for the last 9 months, then their current trajectory suggest profitability in the coming year.

Or perhaps by "the Nintendo's" you meant "the Wii U's"? Either way, turning any profit for 3 consecutive quarters is good news, and glad to see the execs taking a hit when things are bad, that mentality coupled with their pile of cash and lack of debt will keep them going.

No, I think the concept is bad. The Gamepad is unwieldy, burns through its battery quickly and makes the system expensive. Trying to track two screens at different distances is confusing, and even Nintendo's best can't figure out how to make interesting use of the second display. Consider that Mario Kart reduces it to a horn button, and the new Donkey Kong game just leaves the display off.

Have you actually played the Wii U? As in, not at a demo or picked up the controller for a bit, but actually played a game through? I just finished Wind Waker HD, and can attest that the gamepad is actually rather excellent. It is much less confusing than the Wiimote use in Skyward sword, for instance. The screen displays most of the secondary info, maps etc. while keeping the TV screen clear and uncluttered. The controller itself is surprisingly nice to hold and comfortable for long periods of gaming. You *don't* need to look at both screens all the time, only when you need to change items.

The second screen is also excellent to play the game standalone while the TV is in use by someone else. The weight of the controller is very nicely balanced, it never feels too heavy or unwieldy.

Re. the battery life of the controller, there's some cause for complaint, I admit. It lasts for ~3-5 hours, and I usually don't play that long. The few times I did want to, I had to plug it in and play, which was annoying. The extended battery at $32 a pop is a bit overpriced, and should be included standard. However, there are cheaper solutions for $15-20 that are just as good. The Pro controller has a battery life of ~80 hours.

The absence of gamepad for the new DK is a bit perplexing, but I don't think it has been confirmed yet. However, my main point is, the Wii U, which pushes its games at 1080p and 60 FPS is good enough for most games that they sell. The real problem is indeed the release schedule of the games itself. Even this year, there are only 10-12 games (of varying quality, I must assume) hitting the shelves. That is not enough.

The concept itself isn't that bad. The execution (seriously? Yet another vastly underpowered console?) and the software support are what's lacking. This combination has been a perpetual problem for Nintendo over the last several generations and I don't know what the company has even tried to do to fix it.

That doesn't really add up, several generations? Wii was the first Nintendo system that was notably underpowered compared to it's rivals, and it crushed them. The Wii U is certainly not as potent as the PS4, but it's not impotent, it's decent HD.

Yeah, of course you're right. The Gamecube didn't use weird mini-discs that caused space issues on games, the N64 didn't use cartridges in the era of CD-ROMS and definitely didn't have a texture limit of 4KB. Only the Wii was underpowered. Yup.

Most people put the Gamecube ahead of the PS2, and behind or on par with the Xbox, the discs had some drawbacks, but it was a potent system.

N64 was definitely more powerful than the PS1 on paper, the cartridge vs optical tradeoff was space for load time.

I also said 'notably underpowered', people debate about all the systems each generation, and until the Wii, the Nintendo systems had some advantages over their competitors, and were in the thick of things performance-wise.

The concept itself isn't that bad. The execution (seriously? Yet another vastly underpowered console?) and the software support are what's lacking. This combination has been a perpetual problem for Nintendo over the last several generations and I don't know what the company has even tried to do to fix it.

That doesn't really add up, several generations? Wii was the first Nintendo system that was notably underpowered compared to it's rivals, and it crushed them. The Wii U is certainly not as potent as the PS4, but it's not impotent, it's decent HD.

Yeah, of course you're right. The Gamecube didn't use weird mini-discs that caused space issues on games, the N64 didn't use cartridges in the era of CD-ROMS and definitely didn't have a texture limit of 4KB. Only the Wii was underpowered. Yup.

EDIT: WAIT! No! I just came back to reality and realized that the things I said above DID happen, and Nintendo really has been releasing underpowered consoles for over a decade! Golly, what a silly mistake to make!

All I see in this comment is that you have no notion of what the word "underpowered" means.

The concept itself isn't that bad. The execution (seriously? Yet another vastly underpowered console?) and the software support are what's lacking. This combination has been a perpetual problem for Nintendo over the last several generations and I don't know what the company has even tried to do to fix it.

That doesn't really add up, several generations? Wii was the first Nintendo system that was notably underpowered compared to it's rivals, and it crushed them. The Wii U is certainly not as potent as the PS4, but it's not impotent, it's decent HD.

Yeah, of course you're right. The Gamecube didn't use weird mini-discs that caused space issues on games, the N64 didn't use cartridges in the era of CD-ROMS and definitely didn't have a texture limit of 4KB. Only the Wii was underpowered. Yup.

Most people put the Gamecube ahead of the PS2, and behind or on par with the Xbox, the discs had some drawbacks, but it was a potent system.

N64 was definitely more powerful than the PS1 on paper, the cartridge vs optical tradeoff was space for load time.

I also said 'notably underpowered', people debate about all the systems each generation, and until the Wii, the Nintendo systems had some advantages over their competitors, and were in the thick of things performance-wise.

The N64 had more base processing power but did not have the space to reasonably take advantage of it, rendering it completely moot.

This extends to their handheld systems as well, just by the way: the GameBoy vs. the Game Gear and the Wonderswan, the DS vs. the PSP, the 3DS vs. the Vita... I don't see how you can even claim that Nintendo hasn't been in the underpowered hardware business for a long, long time.

I can't see myself ever using the GamePad, but that doesn't mean that was the point of failure. Every Nintendo console has had some technological quirks that didn't help them much - and my much-loved 3DS was not purchased for its ability to play in 3D.

But honestly, from what I understand they just didn't have the software to sell it - even after I saw the PS4 and XB1 and shrugged, I didn't even see much Wii U marketing, nor any really compelling games to get it for. And to the casual market, it still needs to be identified that the Wii U is not an add-on or sizing change to the Wii.

Nintendo pushed out 12.7 million units of the system during the last nine months of 2013, including over 5 million in Japan alone. That number sounds less impressive, though, when you compare it to the 24.5 million the Nintendo DS sold during a similar nine-month stretch in its third full year on the market.

I think smartphones are pushing casual gamer sales away from handhelds. There is still the core market of dedicated handheld gamers, but for casual gamers and especially parents with bored kids, a free-to-play (as long as you lock out your credit card from in-app purchases) or $1.99 smartphone game is a lot more palatable than a $39.99 3DS or Vita title.

I hear that mobile gaming is even more prevalent in Japan due to long commute and F2P/social game model, a bit surprised that the 3DS is doing so well in its home country.

That sounds so weird to see a company executive take a salary cut when their company is doing poorly.

The north american method would be to claim nothing is wrong and give themselves multi-million dollar bonuses.

Actually, you said a key word, American. I wouldn't be surprised if the cuts were voluntary as the bulk of Japanese business culture that I've been exposed to carries a ton of personal pride. Failure is not an option and is looked down upon, no matter how small.

Granted, you said North American. Don't know how my Canadian neighbors operate, outside of Blackberry - "All is well... Not going under... Nothing to see here... Hey - did you see that Moose run by? Beauty!"

You don't need to look any further than Research in Motion to see the problem doesn't stop at the US border.

I think the Gamecube and Wii taught too many of us that Nintendo hardware is not really a good investment when only the first-party games are worth playing.

I would buy a Pikmin or Zelda title in a heartbeat for my Xbox or even my phone, but I'm not inclined to buy an entire new console anymore just to play those games and maybe one or two others here and there over the next few years.

Nintendo would make a hell of a lot more money off of me if they sold even one product that fit that mindset.

That's exactly why I'm only inclined to buy Nintendo consoles, because they've got the most compelling exclusives. I game on my PC, and I own Nintendo systems, that combination gets me more gaming than I have time for, and there are only a couple games each generation that are exclusive to a competitor that I'd buy if they were available.

What I don't understand is how Nintendo didn't see this coming-- 3rd party developers must have told them they weren't interested in supporting the system. That would be fine if there were a bunch of 1st party titles in development, but that certainly doesn't seem to be the case... and they had to know that too right?

That sounds so weird to see a company executive take a salary cut when their company is doing poorly.

The north american method would be to claim nothing is wrong and give themselves multi-million dollar bonuses.

Actually, you said a key word, American. I wouldn't be surprised if the cuts were voluntary as the bulk of Japanese business culture that I've been exposed to carries a ton of personal pride. Failure is not an option and is looked down upon, no matter how small.

Granted, you said North American. Don't know how my Canadian neighbors operate, outside of Blackberry - "All is well... Not going under... Nothing to see here... Hey - did you see that Moose run by? Beauty!"

It's not just the cultural dislike for failure that causes the difference. Americans (US Americans, at least; I can't speak for anybody else) have a pretty strong tendency to look down on failure as well. The main difference is assigning responsibility for that failure. These executives are taking the hit because their culture says that, as the leader, any failures on their watch are ultimately their fault.

Unfortunately, while the US military espouses that the leader is responsible for everything the unit does or fails to do, US business leaders talk about personal responsibility but rarely actually take it.

What I don't understand is how Nintendo didn't see this coming-- 3rd party developers must have told them they weren't interested in supporting the system. That would be fine if there were a bunch of 1st party titles in development, but that certainly doesn't seem to be the case... and they had to know that too right?

That sounds so weird to see a company executive take a salary cut when their company is doing poorly.

The north american method would be to claim nothing is wrong and give themselves multi-million dollar bonuses.

That's not the only difference between American and Japanese CEOs. A couple of years ago when regulators implemented a new rule for pay disclosure by execs making more than US $11 million, only 300 people in the country needed to comply.

That's because most CEOs don't make an extremely high salary. They get the big bucks from bonuses and stock options. Preferred stock FTW!

"On average, only about a third of Japanese executives' income comes from stock-option grants (which weren't possible until deregulation in the late 1990s) and bonuses linked to financial metrics such as return on equity and revenue growth, says Naohiko Abe, head of Towers Perrin's Japan office.

Contrast that with the U.S., where the ratio is around 80%, and Europe, where it's 60% to 70%."

Tis a shame that the Wii U doesn't have more software for it, idk what Nintendo is going to do after they release Super Smash for the Wii U as that will be the biggest and (like most of the hardcore crowd) last purchase that a lot of Wii U owners will make. The new Super Mario 3D World is fun, but it hasn't changed too much from the Mario you know and honestly it's the same experience if you have a good PC and can run Dolphin proficiently.

There are a few things I can think of that would make a few niche audiences pick one up but these fans might add up to 500k if that.

1. Since Nintendo owns the right to the Fatal Frame franchise now; Nintendo should actually release an HD copy of Fatal Frame 4 in the west as well as 1-3 in a bundle if possible.

2. Re-Release HD copies of X-Seeds Xenogears and The Last Story for the Wii U.

3. Create an Animal Crossing game for the Wii U that can work with 3DS players.

4. Create a Pokemon game for the Wii U that can work with Pokemon X/Y players

5. Use E-Shop for re-releasing GameCube title classics such as Metroid Prime, F-Zero, Super Smash Melee and other titles.

Another Nintendo article is another chance for me to say how much I love my Wii U, how even though I've been a hardcore gamer my entire life, I've grown tired of all the Creeds and Duties, and Nintendo supplements my PC with the console games I really want to play, how the Wii U Gamepad is a boon for families and fun to use to boot, and that while I realize the sinkhole Nintendo has gotten themselves into, I hope that they can at least weather this span and do something phenomenal in a few years that will yet again make us re-think gaming.

Another Nintendo article is another chance for me to say how much I love my Wii U, how even though I've been a hardcore gamer my entire life, I've grown tired of all the Creeds and Duties, and Nintendo supplements my PC with the console games I really want to play, how the Wii U Gamepad is a boon for families and fun to use to boot, and that while I realize the sinkhole Nintendo has gotten themselves into, I hope that they can at least weather this span and do something phenomenal in a few years that will yet again make us re-think gaming.

The concept itself isn't that bad. The execution (seriously? Yet another vastly underpowered console?) and the software support are what's lacking. This combination has been a perpetual problem for Nintendo over the last several generations and I don't know what the company has even tried to do to fix it.

How is it that underpowered, though? What about it makes you unable to make games on it?

The Wii U and 3DS both share the problems of arriving significantly more expensive than their predecessors with differentiating features (the gamepad, stereoscopic 3D) that Nintendo has yet to capitalize on with software that the mass market thinks is worthwhile. So in that sense they're both pretty big missteps from a company that should've known better.

However, whereas the 3DS can survive on franchise titles (Pokemon, etc.), the Wii U cannot. But it's too late to do anything about it now, so all Nintendo can do is bring on more developers and try to do a better job the next time around.

Yeah, of course you're right. The Gamecube didn't use weird mini-discs that caused space issues on games, the N64 didn't use cartridges in the era of CD-ROMS and definitely didn't have a texture limit of 4KB. Only the Wii was underpowered. Yup.

This sounds informed, but it's not. The N64 had 4MBs of super-fast main memory that was used for textures. They were dynamically streamed to 8KB of texture cache during rendering. Even 4MBs sounds bad by today's standards, but its competitor was the Playstation 1, which had 2MBs of slow main memory and 1MB of VRAM. Basically the N64 had 3 MBs of VRAM when you take code and sound buffers into account. Textures were only limited by the space on the cartridge. (Obviously the real problem.) Cartridges aren't the whole story about why the PS1 beat it though... Nintendo was very picky about whether it would publish a game or not. Sony published *anything*. Anything that someone made got published (if they could pay to have the CDs printed). It was a little like the iOS App Store in that way... small-developer gems amid piles of garbage.

As for the GameCube, if you put them side-by-side I think anyone would agree it out-performed the PS2. Graphically, load times, game physics, you name it. Of course the PS2 had the advantage of being the sequel to a hit and doubling as a cheap DVD player when that was important. The GameCube didn't out-perform the Xbox though... except of course in sales where it sold 33 million to the Xbox's 24m.